Broström is one of the leading logistics companies for the oil and chemical industry, focusing on industrial product and chemical tanker shipping and marine services. Broström is based worldwide and operates within two areas: Shipping and Marine & Logistics Services. Broström’s head office is located in Göteborg, Sweden.
Press Release INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2006 Broström AB (publ) – Reg. no. 556005-1467
•
Third quarter markedly stronger than a year ago -
•
Profit after net financial items January - September SEK 538 m (440) -
•
Cash flow per share SEK 18.72 (14.71). Disposable liquidity amounted to SEK 1,112 m (1,295 on 31 December 2005). The dividend payout was SEK 261 m.
Change in transport capacity during third quarter -
•
Net sales SEK 841 m (944, of which 174 pertains to sold subsidiaries). Profit after tax SEK 148 m (79). Earnings per share SEK 4.52 (2.35).
Cash flow and disposable liquidity -
•
Net sales SEK 2,561 m (2,691, of which 528 pertains to sold subsidiaries). Profit after tax SEK 465 m (371). Earnings per share SEK 14.13 (11.25). Return on capital employed 13.2% (14.2).
Profit after net financial items for Q3 SEK 163 m (93) -
•
Strong start, mainly for large tonnage, followed by a slight weakening in the overall spot market towards the end of the period. Completed acquisitions are having a steadily greater impact on earnings. Net profit for the third quarter up 87% compared with the third quarter a year ago.
The BRO EDGAR and the BRO ERIK, both of 37,300 dwt and built in 2004/2005, were acquired. The BRO DISTRIBUTOR (14,500 dwt), the third D-class newbuilding in a series of four vessels, was delivered and is now employed in Broström’s European traffic. The GAN VENTURE (47,000 dwt), the first Dünya newbuilding in a series of eight vessels, was delivered and is now employed in Broström’s Asian traffic. The BRO TRAVELLER (14,320 dwt, built 1988) and the TREGUIER (32,000 dwt, built 1986) were sold.
Outlook At the start of the fourth quarter, the spot market has been characterised by continued volatility in Broström’s market segment. Structural changes in the market and widening regional imbalances are giving rise to a continued greater need for transport in Broström’s segment. The outlook for 2006 and into 2007 continues to be favourable.
1
9 months SEK m
Third quarter
Full year
2006
2005
2006
2005
2005
2,561.2
2 690.6
840.9
943.8
3,818.1
Operating profit (EBIT)
677.0
502.4
213.3
120.8
812.4
Profit after net financial items
537,6
439.7
162.6
92.6
720.1
Profit for the period
465,0
371.0
148.4
79.4
622.9
1 654.4
708.9
756.2
311.7
1,620.0
610.9
474.6
223.3
80.4
1,111.9
1 025.3
1,294.9
Return on capital employed, %
13.2
14.2
15.9
Equity/assets ratio II, %
34.7
39.7
37.2
Profit before tax per share, SEK
16.47
13.63
4.97
2.85
22.26
Net profit per share, SEK
14.13
11.25
4.52
2.35
18.89
Net profit per share after dilution, SEK Cash flow from operating activities per share, SEK Average number of shares
14.13
11.15
4.57
2.33
18.76
18.72 32,631,012
14.71 32,254,946
6.84 32,647,353
2.47 32,371,603
19.15 32,346,920
Net sales
Investments Cash flow from operating activities Disposable liquidity
619.3
Supply and demand in the oil energy sector are largely in balance, which means that small disruptions in the production and distribution chain have a rapid impact on the freight market. As a result, spot market prices for shipments will fluctuate sharply in the coming years, and transportation will increasingly be made over longer distances. In the long term, this is having a favourable effect on the transport sector and is leading to a greater need for vessels.
ACTIVITIES Shipping Market overview The first half of the year was characterised by a volatile freight market. The year started with a very strong freight market, followed by a gradual decline in freight rates. A recovery was noted at the end of the second quarter, especially for large tonnage. A more detailed description of the market’s development is provided in the half-year interim report.
In the current market, the ability to swiftly adapt to market changes and at the same time offer reliable transportation will be increasingly significant. Critical mass and geographic presence will be increasingly important competitive advantages in a market in which the number of transported tonne-miles is growing.
The increase in freight rates during the latter part of the second quarter continued into the third quarter, with a slight levelling toward the end of the period. Hurricane activity in the Gulf of Mexico during the third quarter was considerably less than a year ago, and thus last year’s sharp rise in freight rates towards the end of the quarter was not repeated this year. Stocks of oil products have been built up ahead of the hurricane season and the coming winter and are currently at a high level, which has lowered demand for transportation in the near term.
The shipyards’ orderbooks remain very wellfilled, newbuilding prices continue to be high, and delivery times are very long. The price trend for quality second-hand tonnage is following the same pattern. Development for Broström Broström has continued to strengthen its position in product and chemical tanker shipping in 2006. Additional vessels have joined the fleet whilst older vessels have been sold.
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In mid-March the partnership with Dünya Shipping was expanded to also include six product and chemical tankers that are currently being built in Turkey. The vessels are of 17,000 dwt, ice class 1A, and Broström and Dünya will each own three after delivery. The vessels will be employed in Broström’s European traffic, and deliveries will begin in autumn 2006 and continue until early 2008.
Completed contract negotiations during the third quarter have had a favourable outcome in terms of both price and volume. The market strengthening that occurred toward the end of the second quarter primarily for large tonnage operating in Asia continued into the third quarter and has also had an impact on Broström’s other traffic. A characteristic of Broström’s business model is to optimise utilisation of the fleet by combining shipments under contracts of affreightment with shipments in the open spot market. This creates conditions for more stable longterm earnings. Of Broström’s total transport capacity, 50%-60% is employed under contracts of affreightment. This percentage has been maintained despite the increase in the number of vessels in the fleet.
In April, two vessels (7,500 dwt, ice class 1A) were ordered from the Dutch shipyard Ferus Smit B.V. The vessels will be 50%-owned each by Broström and Erik Thun AB, with delivery scheduled in 2009.
Broström’s commercial fleet currently comprises approximately 80 vessels. Within the next two years, when the newbuildings on order will have been delivered to Broström, the commercial fleet will amount to approximately 100 vessels. The acquisitions and new partnerships entered into in 2005 are contributing to higher employment of the fleet and enabling greater capacity utilisation. This will gradually have a greater impact on the company’s earnings.
Third quarter In July Broström reached an agreement with its partner Rigel Schiffart on the delivery of the GEESTESTERN and the LEINESTERN, both of 37,300 dwt and built in 2004 and 2005, respectively. These two vessels, which were taken over in August, were renamed as the BRO EDGAR and the BRO ERIK, respectively. In addition, an option agreement was signed that gives Broström the right to acquire the HUNTESTERN following the expiration of the current charter or by year-end 2007 at the latest. Prior to this, Broström had owned three sister vessels of the ones now acquired.
In early March the BRO STELLA (69,930 dwt, built in 1995) was delivered to her buyers. The sale generated a capital gain of SEK 86.1 m and a liquidity contribution of SEK 226.5 m.
Broström intends also in the future to continue taking advantage of possible consolidation opportunities in the segments in which the company is active.
Two of Broström’s D-class vessels, the BRO DESIGNER and the BRO DISTRIBUTOR (both of 14,500 dwt), were delivered at the end of June and the end of September, respectively, from the shipyard in China. The vessels are wholly owned by Broström and have been employed in the company’s European traffic together with other vessels of the same class size. Delivery of the fourth and final vessel in this series is expected in December.
Changes in the fleet First half of the year In February the BRO PROMOTION (formerly the IVER EXAMPLE) and the BRO PREMIUM (formerly the IVER EXACT) – both of 45,700 dwt – were taken over. These vessels were already part of Broström’s commercial fleet but were owned by the Dutch company Vroon. Broström now owns 100% of both vessels.
Two vessels were sold during the third quarter: the BRO TRAVELLER (14,320 dwt, built in 1988) and the partly owned TREGUIER (32,000 dwt, built in 1986). These sales gave rise to a pre-tax capital gain of SEK 30 m and a capital contribution of SEK 87 m.
The BRO DELIVERER (14,500 dwt) was delivered in early April from the shipyard in China.
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Sales and profit January - September 2006 Net sales during the first nine months for the Shipping operations area amounted to SEK 2,372.3 m (2,074.6).
The delivery of the GAN VENTURE, which took place on the last day of the third quarter, marked the start of the actual physical expansion of Broström’s Asian operations, which is in line with a policy decided upon several years ago. The vessel is the first in a series of eight vessels ordered by Broström’s partner Dünya Shipping for employment in Broström’s Asian traffic. Broström has now reached an agreement to take the first two vessels in this series from Dünya Shipping on time charter. In addition to the GAN VENTURE, two vessels are scheduled for delivery in 2006, four in 2007, and one in 2008. When all of these vessels have been delivered, Broström will have doubled its capacity in Asia.
Operating profit was SEK 679.1 m (496.4). Development and profit during the first nine months were satisfactory. Shipping 9 months SEK m Net sales Operating profit
Tonnage tax Starting in 2004, Broström’s entire French operation is affiliated with the tonnage tax system, in accordance with the EU’s shipping policy.
2006
2005
2,372.3
2,074.6
679.1
496.4
Third quarter 2006
Full year
2005
2005
803.7
739.0
3,073.0
226.9
126.1
807.3
Marine & Logistics Services Market overview Following the sale of Broströms Resebyrå AB in early May to VIA Travel, Broström’s Marine & Logistics Services operations now consist solely of the activities conducted by the Broström Ship Agency Network.
In Sweden a proposal has been submitted on the introduction of a tonnage tax. The proposal calls for Sweden to adopt the EU’s maritime policies and thereby achieve competitive neutrality with respect to other maritime nations within the EU. The proposal, which is expected to be adopted by Sweden’s Parliament in 2006, is proposed to apply starting with the 2005 tax year. Since a formal decision has not been made as of this report’s publication, this report has been prepared in accordance with the old system of traditional taxation. However, as soon as a formal decision has been made, Broström intends to apply for affiliation to the tonnage tax system, provided that the pending proposal is approved in its entirety.
The sale of Broströms Resebyrå AB generated a capital gain of SEK 11.3 m and a liquidity contribution of SEK 16.9 m, which were included in the 2006 half-year report. Activity has been high at most ports in which the Broström Ship Agency Network is represented. This applies especially to ports in which Broström is involved in tanker clearing. Demand for project forwarding services was high during the period, which also contributed to the favourable trend. Earnings were satisfactory for the business area.
Of the total deferred tax on the balance sheet as per 30 September 2006, amounting to SEK 497.4 m, SEK 458.8 m is attributable to the Swedish shipping operations.
Operating profit was SEK 226.9 m (126.1).
Sales and profit Q3 2006 Net sales during the third quarter amounted to SEK 35.9 m (204.7). The decrease is attributable to the sale of Nordic Bulkers AB in October 2005 and the sale of Broströms Resebyrå in May 2006. Sales during the third quarter of 2005 excluding the sold businesses totalled SEK 31.1 m.
Development and profit during the third quarter were satisfactory.
Operating profit was SEK 3.4 m (7.9), which is satisfactory.
Sales and profit Q3 2006 Net sales during the third quarter for the Shipping operations area amounted to SEK 803.7 m (739.0).
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Sales and profit January - September 2006 Net sales during the first nine months amounted to SEK 185.2 m (615.7). The decrease is attributable to the sale of Nordic Bulkers AB in October 2005 and the sale of Broströms Resebyrå in May 2006. Sales during the first nine months of 2005 excluding the sold businesses totalled SEK 173.2 m as per the date of sale.
The return on capital employed was 13.2% (14.2). Tax expenses during the period amounted to SEK -72.6 m (-68.7), corresponding to 13.5% (15.6) of profit before tax. Paid tax amounted to SEK -6.0 m (-3.3). The figures for the period include capital gains of SEK 113.4 m (108.7) on sales of vessels and operations.
Operating profit was SEK 8.7 m (19.4).
Breakdown by operating area 9 months
Marine & Logistics Services 9 months
Third quarter
Full year
SEK m
2006
2005
2006
2005
2005
Net sales
185.2
615.7
35.9
204.7
743.3
8.7
19.4
3.4
7.9
22.7
Operating profit
SEK m
Third quarter
Full year
2006
2005
2006
2005
2005
2,372,3
2,074.6
803.7
739.0
3,073.0
185,2
615.7
35.9
204.7
743.3
3,7
0.3
1.3
0.1
1.8
2,561.2
2,690.6
840.9
943.8
3,818.1
679,1
496.4
226.9
126.1
807.3
8,7
19.4
3.4
7.9
22.7
- 10.8
-13.4
- 17.0
-13.2
- 17.6
677.0
502.4
213.3
120.8
812.4
Net sales Shipping M & L Services Other
EXCHANGE RATE MOVEMENTS
Operating profit Shipping M & L Services
Broström is affected by exchange rate movements primarily of the USD rate to SEK. For further information, see “Risk factors and sensitivity analysis” on page 47 of the 2005 Annual Report.
Other and joint expenses for the Group
MAJOR DEVELOPMENTS AFTER THE PERIOD
GROUP FINANCIAL RESULTS Net sales for the Group during the period amounted to SEK 2,561.2 m (2,690.6). Sales in 2005 excluding Nordic Bulkers AB and Broströms Resebyrå (5 months) totalled SEK 2,248.1 m, entailing volume growth of 14.0% for continuing operations.
In connection with the acquisition of the Danish company Nordtank Shipping in 2005, Broström also acquired a 9% stake in three vessels owned by the Swedish shipping company Furetank. In early October Broström acquired an additional 21% in the FURE NORD (16,000 dwt, built in 2004). Following this, Broström now owns 30% of the vessel.
The share in associated companies’ profit was SEK 18.0 m (8.2). Of this share, SEK 15.8 m is related to the sale in the third quarter of the vessel TREGUIER which was owned by an associated company.
OUTLOOK At the start of the fourth quarter, the spot market remained volatile in Broström’s market segment.
Operating profit was SEK 677.0 m (502.4). Net interest expense amounted to SEK -134.7 m (- 73.2) The USD Libor interest rate (6 month) changed during the period, from 4.7% on 31 December 2005 to 5.4% on 30 September 2006. Net financial items amounted to SEK -139.4 m (-62.7), which resulted in a profit of SEK 537.6 m (439.7) after net financial items.
The oil energy market today is essentially in balance. It appears that the expansion of refinery capacity will meet the rise in demand in the years ahead, which points to continued high capacity utilisation and vulnerability to external disruptions. Shipments are being made
5
over ever-greater distances, and regional imbalances are expected to continue growing. Moreover, the rapidly growing Chinese economy, US oil needs and Russian exports of oil via the Baltic Sea are contributing to high demand for the shipment of oil and chemical products. Since there is a virtual balance between supply and demand in the market, events that disrupt various flows will cause the freight market to be periodically characterised by great volatility. The underlying long-term trend is judged to be positive.
During the first quarter the BRO STELLA (69,930 dwt, built in 1995) was delivered to her buyer. The sale generated a pre-tax gain of SEK 86.1 m and a cash contribution of SEK 226.5 m.
The increasingly stringent requirements being made by authorities and customers with respect to quality, safety and the environment are putting higher demands on the overall organisation that is involved in the logistics chain.
Also during the third quarter, the BRO TRAVELLER (14,320 dwt, built in 1988) and the TREGUIER (32,000 dwt, built in 1986) were delivered to their buyers. These sales generated a combined pre-tax capital gain of SEK 30 m and a cash contribution of SEK 87 m.
During the third quarter, the GEESTESTERN and the LEINESTERN (both of 37,300 dwt and built in 2004 and 2005, respectively) were delivered from Broström’s partner Rigel Schiffart. The vessels have been renamed the BRO EDGAR and the BRO ERIK, respectively.
Together these factors point to a continued favourable development for Broström and the outlook for 2006 and into 2007 continues to be favourable. Completed acquisitions and established partnerships are expected to gradually contribute to improved earnings in pace with the addition of vessels to Broström’s fleet.
Following delivery of the BRO DELIVERER to Broström in April 2006, the BRO DESIGNER in June 2006, and the BRO DISTRIBUTOR in September 2006, Broström is currently involved in investments in six newbuildings. Additional vessels and newbuildings will be added to the fleet under various partnerships.
The shipyards’ orderbooks are at historically high levels in Broström’s vessel segments, and a large number of vessels will be delivered in the years immediately ahead. In Broström’s view, however, this addition of tonnage will be offset to a large degree by the major need for replacement and structural changes in the market.
Newbuildings on order Name
The value of the US dollar relative to the Swedish krona is an uncertainty factor to note. All else equal, a weakening of the US dollar would have a negative impact on Broström’s sales, earnings and shareholders’ equity, while a strengthening would have a positive effect.
Delivery
Dwt
Ownership
Partner
NB JLZ510
2006
14,500
100%
NB Dünya
2007
17,000
100%
NB Dünya
2007
17,000
100%
NB Dünya
2007
17,000
100%
NB 386
2009
7,500
50%
Thun
NB 387
2009
7,500
50%
Thun
Broström’s updated fleet list can be found at www.brostrom.se.
INVESTMENTS AND DIVESTMENTS
CASH FLOW Cash flow from operating activities amounted to SEK 610.9 m (474.6), or SEK 18.72 (14.71) per share.
Total investments within the Group during the period amounted to SEK 1,654.4 m (708.9). Divestments totalled SEK 390.0 m (341.7). Of total investments, SEK 1,650.3 m (517.2) pertained to vessels and newbuilding contracts.
6
The warrant programme consists of two warrant series with exercise dates in September 2007 and September 2008, respectively. Each employee was entitled to 1,250 warrants. If the programme was not fully subscribed, an additional maximum of 98,750 warrants could be subscribed. The price of each warrant was SEK 6.25 in series 2005/1 and SEK 8.50 in series 2005/2. Each warrant entitles its bearer to subscribe for one share at the exercise price of SEK 157.20. The total number of exercised warrants on 30 September 2006 was 366,550. The remaining number of warrants was 33,450.
FINANCIAL POSITION AND LIQUIDITY The Group’s disposable liquidity on the balance sheet date amounted to SEK 1,111.9 m (1,294.9 on 31 December 2005). This amount includes unutilised overdraft facilities totalling SEK 52.4 m (52.5). The shareholders received a dividend of SEK 261.0 m in May. Net debt increased during the period from SEK 2,577.5 m to SEK 3,266.4 m, mainly due to investments in vessels.
Exercised warrants in the programme entail increases of 1.2% and 0.8%, respectively, in the number of shares and votes.
Shareholders’ equity on the balance sheet date amounted to SEK 2,723.1 m (2,709.5 on 31 December 2005), and the equity/assets ratio I was 32.4% (34.2). The equity/assets ratio II was 34.7% (37.2), which is above Broström’s target of 30%.
There was no dilutive effect in terms of value on the balance sheet date.
STAFF
It should be noted that in connection with the adoption of IFRS, the company has decided not to restate the book value of its vessels to market value. With today’s market values of the Broström fleet it can be asserted that a substantial excess value exists compared with the book values.
The number of employees has not changed significantly.
PARENT COMPANY The activities of the parent company, Broström AB, consist mainly of Group management and administration of joint activities for the Group. The assets consist mainly of shares in subsidiaries and short-term financial investments.
Broström’s financial position is strong and enables continued participation in possible structural changes in the industry.
PLEDGED ASSETS AND CONTINGENT LIABILITIES Pledged assets have increased since the start of the year by SEK 780.7 m and amount to SEK 6,262.8 m (5,482.1 on 31 December 2005). Contingent liabilities have decreased by SEK 22.4 m since the start of the year and amount to SEK 91.5 m (113.9 on 31 December 2005).
WARRANT PROGRAMMES As per 30 September 2006 Broström has a warrant programme in effect, which was introduced in 2005. The programme has been offered to all permanent employees of the Group and to employees of partly owned companies in which Broström’s ownership is more than 50%.
7
9 months
Third quarter
Full year
nor which have been applied in the 2005 Annual Report. Only IFRS 7 Financial Instruments: Disclosures, which takes effect in 2007, is expected to apply for the Group. This new standard pertains to the scope and content in the disclosure of financial instruments and risks in the Annual Report, and upon application it is not expected to have any material impact on Broström’s earnings or financial position.
SEK m
2006
2005
2006
2005
2005
Net sales
24.2
21.7
7.9
7.3
29.2
Profit before allocations and tax
53.9
23.6
4.3
-10.6
429.6
Of which, dividends from subsidiaries and associated companies
73.7
37.2
14.4
-
436.5
Fixed assets
1,981.9
2,015.7
-
-
1,976.3
Current assets
1,856.4
1,189.4
-
-
1,956.2
Total assets
3,838.3
3,205.1
-
-
3,932.5
Shareholders’ equity
ANNUAL GENERAL MEETING 2007
1,586.5
1,304.2
-
-
1,766.3
3.4
-
-
-
3.4
The Annual General Meeting of Broström AB (publ) will be held on Thursday 3 May 2007 at 17.00 in Konserthuset, Göteborg.
Untaxed reserves Long-term liabilities
1,011.5
759.1
-
-
1,077.1
Current liabilities
1,236.9
1,141.8
-
-
1,085.7
Total liabilities and shareholders’ equity
3,838.3
3,205.1
-
-
3,932.5
Investments
1.2
91.3
0.4
0.8
92.4
Divestments
16.9
17.9
-
-
68.8
Disposable liquidity
998.9
711.5
-
-
1,092.0
Of which, unutilised overdraft facilities
52.4
35.2
-
-
52.5
Broström does not have a nominating committee, since an agreement exists between the company’s A-shareholders. One of the aims of this agreement is to establish consensus on nominating matters, which are drafted by the A-shareholders, who jointly submit their recommendations to the AGM for a decision. This procedure has been adopted by an earlier AGM. The nomination work also includes drawing up recommendations for chairman of the AGM, chairman of the Board of Directors, directors’ fees and election of auditor and auditor’s fees.
ACCOUNTING PRINCIPLES This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. The accounting principles of the parent company have been prepared in accordance with RR 32 and the Swedish Annual Accounts Act.
The A-shareholders strive for the greatest possible openness and welcome proposals and views from other shareholders. Shareholders who wish to nominate a director to the board, or who for other reason want to contact a representative of the A-shareholders, are instructed to contact the Chairman of the Board.
Since 1 January 2005 the Broström Group has applied the International Financial Reporting Standards (IFRS) approved by the EU, along with the additional rules stipulated by recommendation RR30 of the Swedish Financial Accounting Standards Council. The Group has applied the same accounting principles and calculation methods in the interim report as in the most recent annual report.
FUTURE REPORTS Broström will release a financial report on the following dates in 2007:
The Group has analysed the IFRSs and interpretations that took effect on 1 January 2006. These have not affected the Group’s reporting. The Group has also analysed the IFRSs and interpretations that have not yet taken effect
8
23 3
February May
24 7
August November
Preliminary Report 2006 Interim Report three months 2007 and Annual General Meeting Interim Report six months 2007 Interim Report nine months 2007
Gรถteborg, 31 October 2006 BROSTRร M AB (publ) On behalf of the Board Lennart Simonsson Managing Director Brostrรถm AB 403 30 Gรถteborg, Sweden Tel +46 31 61 61 00 Reg. no. 556005-1467 More information about Brostrรถm and press releases can be found at www.brostrom.se.
9
REVIEW REPORT We have reviewed the interim report for the period 1 January - 30 September 2006 for Broström AB. Management is responsible for the preparation and presentation of this interim financial information in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim financial information based on our review. We conducted our review in accordance with the Standard on Review Engagements SÖG 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by FAR. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing in Sweden RS and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit. Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not, in all material respects, in accordance with IAS 34 and the Annual Accounts Act. Göteborg, 31 October 2006
Pär Sundaeus Authorised Public Accountant
Lars Nordberg Authorised Public Accountant
10
INCOME STATEMENTS 9 months Group, SEK m Net sales
Third quarter
Full year
2006
2005
2006
2005
2005
2,561.2
2,690.6
840.9
943.8
3,818.1
9.5
10.2
2.1
4.5
14.1
141.3
134.2
22.2
14.4
149.6
18.0
8.2
15.4
3.1
12.5
- 1,422.1
- 1,798.1
- 452.2
- 654.4
- 2,403.1
Personnel costs
- 378.0
- 371.6
- 126.9
- 131.9
- 521.2
Depreciation
- 252.9
- 171.1
- 88.2
- 58.7
- 257.6
677.0
502.4
213.3
120.8
812.4
Capitalised work for own account Other income, including sales of vessels Share in associated companies’ profit after tax External expenses
Operating profit (EBIT)
18.9
44.4
18.1
10.0
61.2
Financial expenses
- 158.3
- 107.1
- 68.8
- 38.2
- 153.5
Net financial items
- 139.4
- 62.7
- 50.7
- 28.2
- 92.3
Profit after net financial items
537.6
439.7
162.6
92.6
720.1
Tax on profit for the period
- 72.6
- 68.7
- 14.2
- 13.2
- 97.2
Profit for the period
465.0
371.0
148.4
79.4
622.9
461.0
363.1
147.7
76.8
611.1
4.0
7.9
0.7
2.6
11.8
Earnings per share, SEK
14.13
11.25
4.52
2.35
18.89
Earnings per share after dilution, SEK
14.13
11.15
4.57
2.33
18.76
Average exchange rate SEK/USD
7.47
7.31
7.24
7.68
7.48
Average exchange rate SEK/EUR
9.29
9.22
9.23
9.37
9.28
Financial income
Profit for the period attributable to Equity holders of the parent Minority interest
11
BALANCE SHEETS Group, SEK m
30 September 2006
31 December 2005
128.5
141.1
ASSETS Fixed assets Goodwill Other intangible fixed assets Tangible fixed assets Financial fixed assets, interest-bearing Financial fixed assets, non-interest-bearing Total fixed assets
2.9
3.7
6 282.8
5,549.7
25.3
27.9
56.6
64.8
6 496.1
5,787.2
Current assets Inventories
70.4
59.1
Short-term receivables
548.8
582.4
Derivative instruments
0.6
5.4
Short-term investments
234.9
260.6
Liquid assets
1,059.4
1,219.9
Total current assets
1,914.1
2,127.4
Total assets
8,410.2
7,914.6
SHAREHOLDERS’ EQUITY AND LIABILITIES 1) Shareholders’ equity
2,723.1
2,709.5
Equalisation reserve
166.9
205.3
Deferred tax
497.4
473.1
Long-term liabilities
Other long-term liabilities, non-interest-bearing
24.8
26.5
4,243.7
3,805.1
4,932.8
4,510.0
Current liabilities, interest-bearing 2 )
347.0
283.6
Current liabilities, non-interest-bearing
407.3
411.5
Total current liabilities
754.3
695.1
Total liabilities and shareholders’ equity
8,410.2
7,914.6
Pledged assets
Long-term liabilities, interest-bearing
2)
Total long-term liabilities Current liabilities
6,262.8
5,482.1
Contingent liabilities
91.5
113.9
Closing date exchange rate SEK/USD
7.31
7.95
Closing date exchange rate SEK/EUR
9.27
9.43
1)
Of which minority interest
29.6
34.8
2)
Of which financial leasing
792.9
938.2
CHANGES IN SHAREHOLDERS’ EQUITY Group, SEK m According to balance sheet, most recent year-end closing Exchange rate difference Derivative instruments, cash flow hedges after tax Profit for the period Dividend to shareholders and minority holders New issue Amount at the end of the period
2006 2,709.5 - 193.6 - 4.6 465.0 - 269.3 16.1 2,723.1
9 months 2005 1,799.5 302.8 371.0 - 161.7 108.0 2,419.6
Full year 2005 1,799.5 346.7 5.2 622.9 - 172.8 108.0 2,709.5
The exchange rate difference for the period is mainly due to changes in the USD exchange rate, which is the reporting currency for the subsidiaries and associated companies Broström Holding BV (incl. the subsidiary Broström Tankers SAS), Broström Tankers AB and Broström Tankers Ltd, respectively.
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CASH FLOW STATEMENTS Group, SEK m
2006
9 months 2005
Full year 2005
OPERATING ACTIVITIES Operating profit
677.0
502.3
812.4
12.1
6.0
47.1
Adjustments for non-cash items, etc. Financial items
- 95.2
- 53.4
- 65.4
Paid tax
- 6.0
- 3.3
- 17.6
Change in working capital
23.0
23.0
- 157.2
610.9
474.6
619.3
- 1,747.5
- 323.9
- 1,016.7
373.2
392.8
543.8
Cash flow from operating activities
INVESTING ACTIVITIES Investments in fixed assets Sale of fixed assets Investment in subsidiaries
-
- 58.2
- 58.2
15.2
-
37.1
Change in other financial fixed assets
2.6
- 0.4
2.7
Cash flow from investing activities
- 1,356.5
10.3
- 491.3
- 261.0
- 161.7
- 161.7
Sale of subsidiaries
FINANCING ACTIVITIES Dividend to shareholders Dividend to minority owners
- 8.3
-
- 11.1
New share issue
16.1
17.7
17.7
New loans
1,163.6
353.7
1,099.6
Repayment of loans
- 274.1
- 532.7
- 660.1
636.3
- 323.0
284.4
- 109.3
161.9
412.4
At start of the year
1,480.5
954.9
954.9
Cash flow for the period
- 109.3
161.9
412.4
Exchange rate difference
- 76.9
85.2
113.2
1,294.3
1,202.0
1,480.5
Cash flow from financing activities Cash flow for the period
Liquid assets and short-term investments
Liquid assets and short-term investments, closing balance
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SHARE DATA Per-share data
2006
9 months 2005
Full year 2005
Full year 2004
Earnings, SEK
14.13
11.25
18.89
16.33
Earnings after dilution, SEK
14.13
11.15
18.76
15.10
Shareholders’ equity, SEK
82.55
75.02
82.69
56.30
Shareholders’ equity after dilution, SEK
82.53
73.08
82.13
55.79
Cash flow from operating activities, SEK
18.72
14.71
19.15
14.65
- 3.35 150.50
7.28
12.75
- 0.67
160.00
160.00
98.75
Number of shares, closing date
32,898,592
32,622,842
32,622,842
31,394,806
Average number of shares
32,631,012
32,254,946
32,346,920
29,287,217
400,000
1,275,750
675,750
648,500
Cash flow for the period, SEK Share price on balance sheet date Number of shares
Number of outstanding warrants
6,406
289,713
218,771
283,583
Number of shares after full dilution at end of period
Number of dilution shares
32,904,998
32,912,555
32,841,613
31,678,389
Average no. shares after full dilution at end of period
32,637,418
32,544,659
32,565,691
29,570,800
KEY RATIOS 9 months
Full year
Full year
2006
2005
2005
2004
Return on capital employed, %
13.2
14.2
15.9
9.9
Return on shareholders’ equity, %
22.9
22.9
27.1
30.0
1.2
0.8
1.0
0.9
Debt/equity ratio, multiple Interest cover ratio, multiple Equity/assets ratio I, %
4.4
5.1
5.7
4.2
32.4
35.1
34.2
32.5
Equity/assets ratio II, %
34.7
39.7
37.2
38.0
Share of risk-bearing capital, %
40.6
46.4
43.2
44.2
Number of
Number of
LARGEST SHAREHOLDERS Owner
Percentage of
29 September 2006
A shares
B shares
capital
votes
Arvid Svensson Invest AB
1,037,984
3,621,391
14.2
26.9 17.1
The Dreijer families
734,954
Odin Fonder, Oslo The Björnram families
1,559,705
7.0
2,552,800
7.8
4.9
280,698
1.4
3.8
171,840
Lennart Simonsson
96,042
205,270
0.9
2.2
Kenneth Nilsson
84,908
267,072
1.1
2.1
Handelsbanken Fonder
908,356
2.8
1.7
Case
813,600
2.5
1.6
Morgan Stanley
595,433
1.8
1.1
Michael Hjortböl Other** Total
2,125,728
485,280
1.5
0.9
19,483,259
59.0
37.7
30,772,864
100.0
100.0
** Including non-Swedish nominee shareholders where individual holdings are not officially registered. For definitions, please see Annual Report 2005.
14